‘Mafia’ warning for South Africa’s economy: report

 ·11 Dec 2022

Well-organised criminal syndicates are interrupting business practices for key institutions and large employers in South Africa.

The expansion of illicit trade is taking its toll on large retailers such as Pick n Pay, Checkers and Woolworths, while organised syndicates allegedly hamper supply chain systems with specific sabotage on crucial institutions such as Transnet.

One of South Africa’s biggest employers, the mining sector, has also raised the alarm over extortion practices within the procurement sector.

The Sunday Times reported that Gareth Ackerman, the chair for the Consumer Goods Council of South Africa (CGC), said that it is up to the government to take action against illicit trade in particular or else the country could end up with a ‘total mafia-driven state’.

The CGC, which represents figureheads of the retail industry, said that illicit trade is a severe issue and has a massive impact on retailers. According to Ackerman, even before the pandemic, 26% of cigarettes sold in South Africa were illicit, reported Sunday Times.

“We’re not quite at the tipping point yet, but we could get there soon,” said Ackerman.

“This is hurting the industry, it’s hurting jobs, it’s hurting the government, and it’s hurting the economy.”

South Africa is at a tipping point

Vested groups

The supply chain that supports the transportation of goods and commodities across the country is currently being held at a knife’s edge.

City Press reports disruptions to Transnet’s northern corridor railway lines caused by cable theft are raising eyebrows in the mining industry.

Coal mining group Exxaro recently told the Transnet Feight Rail (TFR) that occasional transportation disruptions to Richards Bay’s export terminal benefit the trucking industry, said the City Press.

In November, a train with 97 carts loaded with coal was derailed and overturned on its way to Richards Bay – stopping the movement of any other goods on the railway. This incident followed several cases of cable theft days before.

According to the City Press, mining companies are then forced to rely on road transport which, in Exxaro’s case, would cost them up to six times more. The TFR told City Press that the incidents on the northern corridor are a clear sign of it being attacked by organised crime groups.

When asked if it believes that select players in the road transport industry were behind the attacks, the TFR said that they are still ‘collecting intelligence and conducting investigations to determine whether there’s any intentional damage or sabotage’.

Gavin Kelly, the CEO of the Road Freight Association, told the publication that vested interest groups would not hesitate to resort to sabotage to improve their own business.

Business Leadership South Africa (BLSA) CEO said in late November that criminal syndicates in the country are more damaging than bad policy or service delivery failures.

“We are in the grip of an epidemic with large industries from mining to construction being targeted by extortion rackets. This is undermining all of our efforts to build a country with a growing economy based on good policy and an effective state,” Mavuso said.

“We seriously risk descending into a mafia state with the formal sector squeezed out by criminals whose reach stretches deeply into our law enforcement structures,” she said.

Read: South Africa risks becoming a mafia state: CEO

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